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Dealer confidence on the rise, according to Baker Tilly

Around three-quarters (74%) of motor dealers are positive, or very positive, about the year ahead compared to less than half this time last year, according to Baker Tilly.

The upsurge in optimism is due in large part to increased consumer confidence, which 58% of respondents cited as one of the biggest growth opportunities for the year.

The survey revealed that just under half of respondents (46%) believe that new car sales will have the greatest positive impact on their business in 2014, with around a third (32%) putting their faith in used cars.

However, while dealers were largely positive about new car sales, their main area of concern was around servicing, which 43% said they expected to have the greatest negative impact in 2014.

This was marginally higher than the 37% in last year’s survey, and could reflect the trend for cost conscious consumers to either skip servicing altogether or to use local garages, which are perceived to offer cheaper servicing.

The survey also indicated a reluctance among dealers towards investing for the future. Only 19% said they expected to raise finance during 2014, suggesting that dealers are taking the opportunity to consolidate and strengthen their current position, rather than looking at ambitious expansion plans or exponential growth.

Graham Bushby,  national head of restructuring and recovery at Baker Tilly, said: "After a strong 2013 when registrations reached the highest annual total since 2007, 2014 has started well with registrations up almost 8% in January compared to the same month last year.

"However, the recovery is still fragile, the market is very competitive and the recent boost to consumer spending as a result of PPI payouts is unlikely to last.

"What’s clear from our survey is that dealers are taking nothing for granted."

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